Ocean View prepares to borrow $4 million

The big Ocean View police station project is out for bid, and Ocean View Town Council authorized the town to borrow up to $4 million to finance the project at the Dec. 6 council meeting.
As Mayor Gary Meredith noted, the operative term was “up to.” Estimates for the two-story, 15,000-square-foot facility (designed to serve a growing local population over the next 40 or 50 years) are closer to $3 million.

This will be the second of two major capital projects in Ocean View, following on the heels of the pending central water system.

Costs for the water project were initially estimated at $3.8 million, but crept up to more than $4.9 million. The U.S. Department of Agriculture covered the difference with a grant, and agreed to lend Ocean View the rest of the money at 4.25 percent over 40 years.

For the police station, the town will shop for financing in the private sector — and in fact has already set that process in motion, even as contractors stop by town hall to pick up bid packets for the construction itself.

But council members argued, briefly, about just how much they planned to borrow for the new police station project — “up to” disclaimer or not. Council Member Norm Amendt was strong for dropping $1 million cash up front (the town has about $4.5 million in reserves) and financing the rest.

“It’s just too risky right now,” Council Member Eric Magill countered, referring to a possible threat to the town’s real estate transfer tax revenues. Presently, the towns split a 3 percent tax on property transfers with the state. However, in the wake of this year’s budget crunch at the Delaware Department of Transportation (DelDOT), there’ve been rumors the state might retract some or all of that 1.5 percent.

Local Sen. George Howard Bunting (20th District) has repeatedly expressed skepticism that legislators would attempt such a thing, especially as 2006 is another election year. But Magill and others remain cautious — those transfer taxes make up a major portion of the town’s reserves.

Amendt agreed with Magill that the town should plan for the future and needs to keep a nest egg. However, the town had consistently underestimated incoming transfer tax revenues over the last few budget cycles, he pointed out.

Magill noted other risks, short- and long-term (respectively, the possibility of additional reductions in state municipal street aid and the potential loss of cable television franchise revenues). Meanwhile, operating expenses just keep going up.

While transfer tax revenues can only be used in certain areas of the operating budget (and are primarily used to fund capital projects), overall reserves will be much less handsome, even six years out, Magill noted — especially if council plans to hire additional staff to support Ocean View’s growing population.

Town resident Wally Brown quickly questioned council’s decision to borrow up to $4 million for the project, and what possible impact that might have on the taxpayers.

He asked for a ballpark figure on what tax increases the residents could expect, particularly for people who will be connecting to the central water system when that’s constructed. Those residents would be shouldering debt service costs already, he pointed out.

Brown’s estimate was high, however, and Magill corrected him. Residents on the new water system would pay on average between $400 and $500 per year, depending on usage — and that figure included both debt service and usage, he said.

Magill has suggested tax increases will likely prove inevitable, as they haven’t gone up in years — unlike operating expenses.

On a related topic, accountant Jean Schmidt (Jefferson, Urian, Doane & Sterner) delivered the town’s annual audit presentation. This was Ocean View’s first year under Governmental Accounting Standards Board (GASB) 34 ledger sheets.

In other business, council members considered a pair of projects particularly near and dear to the residents of Bear Trap. Early in the meeting, they approved a conditional-use request for a wine and spirits business at 24 Village Green Drive. Later, they considered at length a “previously granted conditional use” from Tidewater Utilities, for a large pumphouse/water treatment facility near the Bear Trap Dunes water tower.

That would be a 76- by 40-foot structure, and Bear Trap residents had a sheaf of questions about the project.

The engineer on the project, Ken Davis (CABE), said Tidewater had actually obtained approval for a treatment facility back in 2000, but the construction permit had lapsed.

However, Roy Thomas, president of the Bear Trap homeowners’ association, said either Tidewater or Bear Trap Farms LLC, or both, should have approached the residents first. Instead, they’d learned about it from the public notices posted around town hall (and on the Internet).

Thomas asked council to table the issue and require the interested to start over, and reopen proper lines of communication with residents.

“This would get us back on the right cycle,” he stated.

It turned out the matter had been advertised a bit prematurely, slated for consideration at the town’s Dec. 15 Planning and Zoning (P&Z) commission meeting. However, with council members’ assurance that the project actually wouldn’t come before the P&Z until the mid-January meeting, and would go through at least two readings before council after that, Thomas accepted their decision to at least introduce the matter.

Some of the elements that came out at the Dec. 6 meeting — the facility would be used to remove rust, and would consist of a “green sand” filtration system (numerous, 6-foot diameter sand filters, the whole structure being 10-feet tall).

Everything would be contained within the building, other than an outside, emergency generator.

Tidewater has a test well at the site (the water in the tower actually comes from wells at Bethany Bay), and if they eventually decide to install a production well, they would also perform chemical (chlorine) disinfection at the Bear Trap facility.

Davis assured residents there would be no odors associated with that process.

Once a month, a truck would come to pump out and cart away the iron residue. Assuming Tidewater installs the production well (which company engineer Greg Coury said was the intent), there would be an additional monthly delivery of chlorine.

Tidewater will also continue to send out an employee once a day, for routine bacteriological testing.

Coury said the company was committed to working with the residents on the aesthetic appearance of the building and any requests for landscaping buffers.